In the classroom today, Lex Levinrad explains the benefits of having your real estate license as a real estate investor.
Not only does it allow you to gain access to MLS, it also come with numerous other benefits that make doing deals both easier and more profitable.
Mike: Welcome back to the flipnerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Lex: Hi, guys, Lex Levinrad with the Distressed Real Estate Institute. And welcome to another expert tip on REI Classroom. Today’s tip is going to be talking about whether or not you should get a real estate license.
Mike: This REI Classroom real estate lesson is sponsored by uglyopportunities.com.
Lex: Myself, I spent the first five or so years in this business as a landlord, rehabber, wholesaler, without having a license. And my logic back then was I didn’t want to have any responsibilities, I didn’t want to deal with taking the license, doing the exam. Ultimately, I decided to go ahead and get my license and it was one of the best things I ever did. And I highly recommend to all of you out there, whether you’re looking to wholesale, fix and flip, or even be landlords, that getting a license is definitely beneficial, and I’m going to tell you why.
Because regardless of whether you want to wholesale or whether you want to buy houses to fix and rent them out, or you want to buy houses to fix and flip them, you need to get deals. You need access to deals, right? You’re looking for those juicy deals that all the other investors are looking for too so by having a real estate license, you have access to the MLS, which means you’re not relying on a third party. You’re not relying on a realtor to find deals for you. You can find the deals for you.
Now, I don’t have anything against realtors. I’m a realtor myself, but it’s better for you to go directly to the listing agent than go to a buyer’s agent for finding deals. So your ability to get deals will definitely go up once you have a license because you’ll have access to the MLS. That’s number one.
Number two, you’ll be able to have the MLS search, which means you can set up automated alerts in your specific target market cities just like a realtor might do for you, but you can fine-tune it and log in every day whereas a realtor might do it one time for you and forget it.
Let’s talk a little bit about REOs, bank-owned properties, short sales, the ones you see on the MLS. Most of them, if you go to them, you’ll see that they have stickers on their windows, which say, “No Trespassing.” So you, as an unlicensed individual, do not really have any authority to even be on that property. You’re actually trespassing if you’re on that property. However, if you’ve got a license and someone were to come and ask you what you were doing there, you’d be able to show them your realtor card and just say you’re previewing the property for a buyer, or, or inspecting the property, or whatever. So that’s benefit number two, okay? Getting around the “No Trespassing.”
Benefit number three, and this is huge, is lockbox codes because if you’re trying to wholesale you’re definitely going to need those. It’s very hard to move a property if you don’t have a lockbox code to give to your buyers. And, if you have a lockbox, you can show it to your buyers, right? You have the ability to have your buyers get onto the property.
Let’s talk a little bit about the other side, making offers. Okay. So a lot of people don’t realize how much online auction sites have developed in the last few years. If you’re bidding on sites like hudhomestore.com for HUD homes. If you’re bidding on Fannie Mae’s HomePath.com, for Fannie Mae homes, if you’re bidding on HomeSteps.com for Freddie Mac homes , if you’re bidding on Hubzu.com, if you’re bidding on Homesearch.com, any of these sites, Auction.com, they allow you to put a realtor in there.
That means if, let’s say you’re buying five properties a month and on each property you’re able to earn a $1250 dollar commission, as an example, then, that’s a lot of money, right? So if you add that up, that could be $50,000, $70,000 a year.
So if you think about it, the cost of an MLS, my MLS costs me $800 dollars a year. And I actually belong to two MLS’s and my second only cost me $200 a year so I have two MLS’s for a thousand dollars a year that I’m able to use and that works out to be about $80 dollars a month. And for that $80 a month, I have the ability to list a property for other people. I have the ability to list a property for myself so any fix-and-flip I do I save the 3% . In addition to that, I’m able to make offers and pick up the commissions. And most importantly, I saved the best for last.
If you don’t have a real estate license and you’re trying to wholesale, you don’t really have the ability, at least legally, to sell properties for other people. Meaning you have to be only selling your properties, properties that you have a beneficial interest in. However, if you pick up a real estate license, you’re allowed to sell properties for other people too, which means other wholesalers, the sellers, talking to cash buyers, etc.
So when you start adding all those benefits up, your “No trespassing,” lockbox codes, being able to bid on properties and pick up commission, being able to fix and flip a property and pick up a commission. There really is no downside. I mean, the only downside is you do need to disclose if you have a real estate license out there. Make sure you put on your office buyer as a licensed real estate agent. Other than that, not really a whole bunch to it. Not much really to think about. I highly recommend you get your real estate license.
So this is Lex Levinrad with The Distressed Real Estate Institute and I hope you enjoyed today’s REI Classroom.
Mike: HomeVestors, the “We Buy Ugly Houses folks,” is a franchise system of hundreds of real estate investors that have purchased over 65,000 houses. If you’d like to learn more about the most powerful real estate investing system in existence, whether you’re a pro looking to take your business to the next level, or whether you have no experience at all, but a burning passion to be successful in real estate investing, please visit Flipnerd.com/ugly to learn more.
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